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Economic Policy Reforms 2012

Going for Growth

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Going for Growth is the OECD’s annual report highlighting developments in structural policies in OECD countries. It identifies structural reform priorities to boost real income for each OECD country and key emerging economies (Brazil, China, India, Indonesia, Russia and South Africa). The Going for Growth analysis also regularly takes stock of reform implementation in all the countries covered.

This report provides internationally comparable indicators that enable countries to assess their economic performance and structural policies in a wide range of areas. Each issue also has several thematic studies.

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Can structural reforms kick-start the recovery? Lessons from 30 years of OECD reform

Not much is known about the short-term effects of structural reforms whose benefits are expected in the long term. It has been argued that some reforms could be detrimental at the current juncture, for instance if they further weakened aggregate demand. This chapter presents new empirical analysis drawn from 30 years of reform data from OECD countries. It shows that, while their benefits usually take time to fully materialise, structural reforms seldom involve significant losses and often deliver gains already in the short run. At the same time, though, some of them, such as unemployment benefit and job protection reforms, have smaller or even negative effects in depressed economies. Current conditions of wide remaining spare capacity, constrained macroeconomic policies and impaired fiscal positions in most OECD countries would put a premium on reforms that offer comparatively strong short-term gains in terms of facilitating the jobs recovery:In all countries, there is a case for sheltering resources devoted to active labour market policies from ongoing fiscal consolidation efforts. Strengthening job-search assistance and training can help job seekers find new jobs more quickly and ensure that those at risk of discouragement remain attached to the labour market.Growth-friendly tax reforms that shift the tax burden away from labour taxes could help strengthen the jobs content of a recovery, while also helping fiscal consolidation insofar as they are implemented in a way that raises tax revenue.A well-designed package of labour and product market reforms could help alleviate the potential transition costs of certain individual reforms. Supporting reforms with a well-functioning financial system and an effective communication strategy is another key for maximising short-term gains.

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